1) Suppose aseven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.66 %

i. Is this bond currently trading at adiscount, atpar, or at apremium? Explain....Select the best option from Below..

A.

Because the yield to maturity is greater than the couponrate, the bond is trading at par.

B.

Because the yield to maturity is less than the couponrate, the bond is trading at a premium.

C.

Because the yield to maturity is less than the couponrate, the bond is trading at a discount.

D.

Because the yield to maturity is greater than the couponrate, the bond is trading at a premium.

ii. If the yield to maturity of the bond rises to 7.09 %(APR with semiannualcompounding), what price will the bond tradefor?